The thing that they don't realize is most Americans will never join the elite
Isn't that redundent? If the majority of the population becomes the elite, the resulting group would not be elite, would it? The emphasis has to be on the "can" not "become."
It is important to realize that society exists to regulate/mollify envy . . . because fundamentally, when pushes come to shoves, everyone thinks that what is mine is mine, what is yours should be mine too; there is no gosh darn reason why you should enjoy any better life than I have, and I have every right to live a better life than you do . . . a set of intrinsicly unreconcillable demands. There are three ways to put a lid on the discontent:
(1) Really making it equal for everyone in material terms. Been there done that, numerous times. All failures for two basic reasons: (a) there is no objective utility value therefore someone is bound to feel cheated; (b) no incentive to work and produce anything if the result is guaranteed to be equal. Eventually the failures produce a Hobessian environment where the Leviathan (dictatorship) becomes highly desirable by a population living in poverty and leading "dark, brutish and gratefully short lives"
(2) Spiritual equality. A common faith that even if we are not all equal in our material lives, there is a spiritual plane upon which we are all equals. That worked for about a millinium and half, and now seems to be on the waning.
(3) Economic upward mobility; i.e. equal opportunity but no guarantee of equal results. Yes, most won't win the lottery, but someone will win it. In a free market, the chances are better than the lottery, because it is actually a positive-sum game, not a zero-sum game like in option (1). That's been the ethos of Anglo-American culture, and the fountainhead of its success vis. practically all other cultures/civilizations of the world.
Oh, yeah, definitely add Locke vs. Hobbs to the recommended reading list.
You spend more time worrying about Marx (I see that you mentioned him yet again -- I don't recall either Karl or Groucho being in the auto industry, so that's enough, thanks) than you do about the car biz.
Your posts indicate that you don't understand the concepts of branding, resource allocation or LTV (B-school jargon for the lifetime value of a customer.) And I suspect that you don't treat workers with respect, despite the ill effects of bad morale on profitability.
Well, at least I know that my earlier prescribed business-plan exercise would have resulted in getting someone like you pink slipped. I get the sense that you would have written a 25-page treatise about the union, instead of analyzing the obvious problems with product, channel, diseconomies of scale and lack of customer focus that are really at the core of the company's problems.
You spend more time worrying about Marx (I see that you mentioned him yet again -- I don't recall either Karl or Groucho being in the auto industry, so that's enough, thanks) than you do about the car biz.
I did not mention either Karl or Groucho by name; you did. Your bringing up Fountainhead and Atlas Shrugged (what exactly do they have to do auto industry or accounting) made bringing up Das Kapital a fair game. Please look in the mirror before throwing around ad hominim attacks. BTW, you brough up the two Ayn Rand volumes as if they were epithets, whereas I at least mentioned Karl's book in the context of scholarly work.
Your posts indicate that you don't understand the concepts of branding, resource allocation or LTV (B-school jargon for the lifetime value of a customer.) And I suspect that you don't treat workers with respect, despite the ill effects of bad morale on profitability.
You are wrong on both counts. Stop random guessing.
Well, at least I know that my earlier prescribed business-plan exercise would have resulted in getting someone like you pink slipped.
An organization like GM can't pay me enough to work there.
I get the sense that you would have written a 25-page treatise about the union, instead of analyzing the obvious problems with product, channel, diseconomies of scale and lack of customer focus that are really at the core of the company's problems.
All that would be beating around the bushes while ignoring the 800 pound gorilla in the middle of the living room. Just like your earlier prescriptions of building small cars on the stupendously expensive domestic labor without looking into any cost and scale potential in foreign acquisitions. Like I said, GM could have been managed much worse.
Proves my point that you are categorically against investing into foreign production facilities to lower labor cost and acquire small-car making capacity.
At least GM management made $20+ billion on other M&A and spin-offs to offset that $16 billion loss on bad deals. You would just have focused on "core competence" carmaking, especially bashing your head trying to make small cars domesticly.
Proves my point that you are categorically against investing into foreign production facilities to lower labor cost and acquire small-car making capacity.
Where did I say this? As usual, you pursue this black-and-white thinking, with no regard for depth or nuance.
For example, if GM wanted FIAT's diesel technology, why not just set up a specific JV project or else license it? They could have done this for a fraction of the $4.4 billion that they flushed down the toilet with that dumb failed endeavor.
The problem with that line of thinking is of course how do you know the analogy here is Germany not Russia? GM and Ford built plants in both Germany and Russia before WWII, along with Christie etc.. Even the vaunted Russian T34 tank was patterned after Christie chasis. As reluctant as I'm to give the reds credits, the fact remains that if Russia had been defeated by [non-permissible content removed] Germany like it did in WWI, there would be less than snowball's chance in you-know-where for our boys to land successfully in Normandy.
More importantly, if protectionism had not taken hold in the late 1920's, it's doubtful Hitler (or Musso or Tojo) would have gained power to begin with. Hey, since you are such a history buff, here's an easy one, care to name the full name of the [non-permissible content removed] party that brought Hitler to power?
It seems to me that you are against every financial dealing GM ever engaged in. It's easy to point out only the errors to prove incompetence; the reality is that the full score card from the GM management is very positive. So positive that there's still several billion dollars cash left on hand even after $2-4 billion a year drain from the UAW labor contracts.
Hind sight is always 20/20. GM's interest in Fiat was far beyond diesel alone. What was envisioned including platform sharing for small cars from Fiat to GM, and medium platforms from GM to Fiat. Plus design input. Rembmer, you want GM to pay more attention to small cars and designs. Based on what was known at the time, Fiat deal looked great. It turned out that Fiat management was cooking its books, and due to international politics . . . GM management was very smart in buying an option to get out. $4 billion is relatively small loss considering both Ford and BMW have each lost far more acquiring much smaller companies.
Here's a thought, care to predict if BMW's current platform sharing on the Mini with Pougeot is a plus or minus? If you think you are smarter than the boys in charge.
the reality is that the full score card from the GM management is very positive.
Well, that explains a stock that has fallen almost 80% from its peak, and the junk bond debt rating. (I'd hate to see what things would be like if they were any less, er, "competent".)
So positive that there's still several billion dollars cash left
I'd suggest that you reread whatever book you used to learn how to read a financial statement. Perhaps you neglected to notice the liabilities side of the balance sheet?
Hind sight is always 20/20.
Except in this case, automotive industry observers knew the deals were bad before they ever got done.
The lessons of bad M&A are nothing new, much of the meltdown of the sixties stock market run-up was the byproduct of the overvalued conglomerates collapsing under their own weight after promises of "synergies" went unfulfilled.
In any case, why didn't Toyota make these same mistakes? I'd say that they had better managers who knew what they were doing, making products that customers want and that don't require deep discounting to sell at minimal margins. They should have spent more time reading Demming, and less time wasting their efforts on Ayn Rand.
Well, that explains a stock that has fallen almost 80% from its peak, and the junk bond debt rating. (I'd hate to see what things would be like if they were any less, er, "competent".)
We have the union to thank for that. GM is at least doing better than US Steel, Pan AM, Eastern or even United. After 120 years of unions in this country, there is not a single company thriving with heavy union influence. Co-incidence? Does anyone doubt that GM bond status would be much higher if union liability is taken off the books?
I'd suggest that you reread whatever book you used to learn how to read a financial statement. Perhaps you neglected to notice the liabilities side of the balance sheet?
Yet, none of the M&A and spin-offs created any liability that was already there due to the union.
Except in this case, automotive industry observers knew the deals were bad before they ever got done.
Some did, most did not. Disagreements are common in business; that's what makes it possible to trade; there wouldn't be trade if everyone is on the same side of the trade.
In any case, why didn't Toyota make these same mistakes?
You are kidding right? Japanese carmakers, like most other big Japanese business, are mired chest-deep in cross shareholdings, it's not even funny. I suppose you never heard of Toyota acquisition of Daihatsu? Fuji Heavy Industry (Subaru) was not exactly founded with 40% Toyota investment to begin with. Toyota is brushing up against 40% anti-trust limit on many companies, both in and out of the auto industry.
and less time wasting their efforts on Ayn Rand
Just as I suspected, you probably never read Rand, Marx, (Adam) Smith, Locke or Hobbs, or any of the other intellectual giants who gave thought to how the society works and how to put together a just one that benefits mankind. Your repeated jokes about Groucho revealed the full extent you knew about Marx. One is prone to repeat the mistakes of others if he does not even know it's been tried before.
Rocky was right, you really do blame the union for anything and everything. You don't offer a reasoned line of argument, but an ideological rant that is rooted in your politics, rather than an understanding of what ails the company.
I go back to my prior point -- people buy cars because they like them and trust them, not because it was built by a certain type of worker. If GM simply built cars people wanted, they would sell them. The average consumer could care less if was built by union labor, non-union labor, a robot or a chimpanzee.
The market share is falling because there are other products that customers prefer. Build a better car, and the sales should improve. Do you have any suggestions about how GM should design a car that people want?
Rocky was right, you really do blame the union for anything and everything.
One crucial failure can lead to many problems throughout a system. The union liability essentially creates a huge burden both in borrowing cost and company manageability. I'm sure that, as someone who went to B-school, you understand that borrowing cost alone can decide whether a company swims or sinks (if your borrowing cost is a couple points higher than your competitor, it doesn't even matter how much a genius you are, your company is as good as dead). . . and it's being played out right in front of our eyes for GMAC.
If GM simply built cars people wanted, they would sell them. The average consumer could care less if was built by union labor, non-union labor, a robot or a chimpanzee.
The second sentence is true for most consumers; Rocky may be an exception. The first setence needs to be qualified with "if they can sell at a price point that people want." That's where the labor cost problem comes in. GM can sell Cadillacs just fine. It becomes a problem when people only want to pay half or a third as much for a Chevy but it costs GM 75% of the cost of the Caddy to make the Chevy.
The market share is falling because there are other products that customers prefer.
At price points that consumers prefer.
Build a better car, and the sales should improve. Do you have any suggestions about how GM should design a car that people want?
GM is doing very well with Caddillacs; far better than crosstown rival Lincoln. In fact, the growth rate of Caddy sales rival those of BMW and Lexus, the top growing brands in that segment. Saab is also making remarkable progress in sales growth. Buick has to convince the market about its new luxury angle; we still have to wait and see, but the new offerings are much better than the old ones. Corvette should become Caddy (dream on! not if the dealers have a word in this and they do). The rest of the Chevy brand should become reseller and service network for cheap imports, as well as making money from rentals. Notice, I did not say a word about designing a specific car . . . because IMHO, the engineers know what is buildable on those ancient union production lines much much better than I do. It would be a waste of time and money to design a car that can not be built on an old production that can not be replaced under union contract.
German National Socialist Workers' Party. It goes to show that warm sounding initial intentions can lead to catastrophic results. Like I said before, people are pain sluts for Nationalism and Socialism . . . oh well.
BTW, with my new born, I discovered that infants love to be swaddled really really tight. They calm down and stay contented as soon as you, well, essentially tie them up with a blanket. I couldn't help wondering if there's something in our neuroreceptors that makes us all prone to trade freedom for security . . . as Ben Franklin said something about deserving neither ;-)
We're starting to get dangerously close to critical mass here. Once Hitler and the [non-permissible content removed] get brought up, it's usually a sure sign that we're at the end of rational discussion, so I'm just going to ask that you be REAL careful here.
I'll take Nationalism and Socialism over our current situation. Free Trade works great for a 3rd world government, since it raises the wealth of that nation. It simply brings down the standard of living of a rich nation like ourselves.
I'm not sure how you could ever use trade freedom and security in the same sentence ? :surprise:
I being a well trained individual in counter terrorism will tell you in my opinion you are very wrong !!!!
But you of course can believe what you want, until the chinese take us over. :P
I'm not sure how you could ever use trade freedom and security in the same sentence ?
Perhaps you are not familiar with Ben Franklin's original quote: "They who would give up an essential liberty for temporary security, deserve neither liberty or security"
I was only paraphrasing him when I said " . . . trade freedom for security . . ." The word "trade" was a verb in that sentence not a noun. Any way, the pertinence of Franklin's words needs no elaboration.
Ben was full of hot air. I've always questioned if he really invented all these things he claimed or simply took credit for them. I also can't understand why he's on the $100 dollar bill :confuse:
If there were no foreign companies making cars and we had to depend on the UAW and the Big 3 to determine the price of a car, can you imagine how much we would be paying?
well atleast someone is lucky. You can babysit my 7 month old spoiled daughter if you need a reminder.
BTW- I agree competition is great for making cars better and will never disagree with that. However how are the Japanese and Domestic auto-manufactor's going to compete with the likes of India and China ???? They will either have to join the same labor pool or fold. This is why the UAW and alot of working folks don't feel secure. Whenever your competition outsources for cheaper labor, you have to follow unless you have superior products, something GM doesn't have yet.
Probably because more than anyone else, he was the personality that held the American revolution together, through his publishing channels and his sage advice. He was also responsible for negotiating the entry of France, whose fleet was instrumental in winning the battle of Yorktown.
Not to mention that sometimes a person can't buy what they want.
IE - Joe Schmoe wants the new Honda Civic, but only has $12,000. Guess Joe'll have to settle for a Hyundai Accent (or a used car). Wait, look at the rebate on that Chevy Cobalt! Joe can buy a Cobalt with most of the goodies of the Civic... That's better than the Hyundai Accent!
It's not what the customer wants, but the customer will settle for it.
Which is a great recipe for an automaker to sacrifce future sales. For when that hypothetical Cobalt buyer eventually does have the money to buy a car they want, it ISN'T going to be a Chevy. For all Chevy means in their mind is 'Second Best'.
Chimpanzees are the best auto workers out there today... If we don't support our nation's chimpanzees, America will become a third-world country.
A nation where mothers will eat their babies for dinner. Fathers will gnaw off their own legs and then beat each other to death with them just to get a job. Not to mention the family dog will go into the stew pot!
Bird will mate in flight! Cats and dogs will live in harmony. It'll be the end of the world!!!
So, support the chimpanzee! It'll be the end of the world if you don't!
>Not to mention that sometimes a person can't buy what they want.
>Repeat after me, fleet sales...
So all these new GM cars around where I live are owned by people who bought them as fleet cars? Or all these new GM cars around where I live are owned by people who really wanted a Honda? LOLWROF
Get real. Just because you don't want one doesn't mean everyone doesn't want the cars.
I take a few days off, and miss Godwin's Law rearing its ugly head.
I'm surprised we aren't talking about Delphi's recent move to void its labor contracts. Where will this lead? Will there be a strike? I still stand by my original prediction
A reply to the second half of your post is a bit more involved, so had to wait after dinner ;-)
Honda and Toyota are already setting up factories in China, some already making cars ranging from Fit to Accord/Camry. IMHO, Japanese auto workers will probably have to make luxury cars, or quite making cars altogether. The "don't feel secure" part is nothing new. I'm sure the drivers of horse buggie cabs in NYC felt very insecure when the horseless carrige (cars) was introduced; not because the latter were either faster or more reliable . . . horses were much better at both than early cars, but because they were cheaper!
That's what progress means. Horse cab drivers had to find new jobs, as simple as that. Carmaking is a very messy and toxic business, just like horse droppings from horse cabs; shift carmaking overseas may well improve living standards in more ways than merely cheap cars. Government intervention to keep obsolete industries in place would only make labor unavailable to new industries that make better use of human and natural resources.
I'm in the midwest. The idea that fleet sales occur doesn't change my opinion. I see Toyotas at the local Hertz satellite rental location. Does that make them bad? They even are in fleets.
I see Toyotas at the local Hertz satellite rental location.
You're comparing apples to oranges. A few fleet sales don't tarnish a badge, but large volumes have obviously negative impacts, as has been covered many times.
Some data from the 2004 model year from Fleet-Central.com. The difference between the Big 2.5 and the larger transplants is significant, and it's easy to see why the "domestics" have felt more at ease at cutting corners with quality and customer satisfaction than have other companies that are more dependent on retail customers for their success:
Yes, Toyota does have fleet sales. But not nearly to the same extent as GM. Not in our market anyway.
Obviously there are many people who buy GM cars because that's what they truly want.
Still, GM problem is not how many cars it sells but what it takes to sell them. I would say price is a higher priority to GM buyers than those from Honda and Toyota and of course those buyers of European vehicles.
I remember when Acura first started out and the ridicule Honda received from some in the industry for trying to sell a $20k plus Japanese car. How times have changed.
I understand that you may not see as high a ratio of GM/F/Chrysler vehicles where you live.
I just don't see the problem with cars being put into fleets. The rentals need to buy cars that are better equiped than the base, stripper models some seem to have. That makes a better impression. Our police department uses Chevies and they make a good impression on the criminals who get to ride in them.
As for the topic: I am expecting to see strikes by Delphi employees. I don't understand the posturing occuring in the talks right now; but I do understand some moves that have been made by Delphi. I expect to see death throe stikes by unions.
I think there may be a short strike, but the unions have to know that if they stage a prolonged strike, it will bring down the entire domestic auto industry.
Yeah and why should they care if they are in the soup line ? Delphi management wants them to go from $26-27 bucks an hour to $16 bucks an hour. That a $10-11 dollar an hour pay cut for the senior workers. They also haven't decided on healthcare benefits which have ranged has high as $650 dollars a month for a family of 4 in some possible proposals. The pension benefits would be frozen, and a 401K plan would be the only source for retirement. Kinda hard to ask a 50-60 yr. old to start saving up for his Golden Years when they are almost here. :confuse:
I also believe that Delphi doesn't really expect the massive wage and benefit cuts they have put forward.
Well it's went from $9.00 an hour, then to $12 bucks an hours, and now is at $16 bucks an hour. Wages aren't the only huge issue. Healthcare and getting a retirement is as important as wage issues. Non-union Toyota pays $21 bucks an hour in the cheap cost of living of the South.
It's a negotiating stance. They need to have a lot to "give up" if they expect the UAW to give up a lot. (job bank, completely funded health care, veto power over plant closings, unmanageable retiree benefits)
Well as you've seen Delphi is closing half of it's U.S. operations so they do have the power to close plants. My fathers plant which by the way is very profitable is even getting closed. :sick:
The unmanagable retirement benefits
This has happened for 2 reasons.
#1 Delphi/GM's lack of funding their obligations.
#2 Back during the golden years of GM's success they blew money down the drain, instead of funding the pension fund like the very successful one found at GE. (Which by the way has almost $30 Billion in it and is a money maker for GE)
I expect the final agreement to be a small reduction in current wages, with health care premium copays added, and elimination of job banks. I expect to see massive changes in the retirement plan, even possibly going as far as changing to a defined contribution plan for new workers instead of a traditional defined benefit pension.
This has already happened as was agreed on back in 1999'. My aunt is making $14 bucks an hour with a potential top wage of $18 per hour. She has a 401K plan only and pays a good portion of her health insurance. Now Steve Miller want's to knock her down to $10-12 bucks an hour. (new hires) with a top wage of $15-16 per hour. She said it wouldn't be worth her gas to drive all the way to coopersville. I 100% agree with her. I guess it's all moot since she has only worked there a month, and she found out Friday she was going to lose her job within two years. She said she wished they would of told her that before she quit her last employer for Delphi. "I personally think that's very wrong,especially since management probably knew this was going to happen for a while" :mad:
I suppose the way alot of 20+ yr. Delphi employees look at the current situation is why should I care about the survival of my company when they are pernamently closing the doors on me and my friends anyways ???? They are even closing the profitable divisions due to greed. The company is investing money in China and the U.S. operations won't exist anyways in 10-15 years, so why should I give a rats behind.
I suppose the EX-Delphi workers will have to settle for a greeters job at Walmart since they have lost there youth. No up and coming company is going to hire a 25 yr. veteran of Delphi because of all the wear and tear. These are not just doom and gloom idea's, but are common facts backed by statitics. Why hire a 55 yr. old, when 25 yr. old Johnny will give me longevity. I guess the alternative is the sharpened guillotine. Dad expects the worst- suicides by some. He saw tears in many peoples eyes once the bad news hit. The "Ice Man" Miller honestly doesn't care. Former Multi-Millionaire and CEO J.T. Battenburg who resigned over the cooking the books scandel got out alive. Alan Dawes-CFO- walked away with no lawsuit who was in charge of cooking the books.
My question is what are these colleges teaching the leaders of this great country. "The buisness of America is just buisness" and Politics works the same way ?
I guess I'm only a small fish in this country, but atleast I can sleep at night peacefully knowing my "maker" isn't going to punish me for treating good folks inhumanely. I would characterize myself as a very patriotic, morale, caring person, that has passion for the well being of his country and it's citzens.
$650/mo for a family of 4 is actually incredibly good deal for comprehensive healthcare coverage. I'm paying $850/mo for a family of 3, and that is HMO with no drug coverage at all and $25 deductible for every visit.
All those defined benefits plans are pie-in-the sky promises that can not possibly be fulfilled because there is no realistic actureal on how long people are going to live and what medical intervention will be available even 10 years from now. Frankly, even those for the government employees are questionable in the long run without massive tax increases. Everyone in the real world has been on 401k and other defined contribution plans for over a decade. The proverbial writings on the wall have been there for the domestic automaking for two decades. The empty promises in the union contracts are just that, empty promises. The workers would have started searching for new jobs over the past two decades without those union contracts holding their attention like mirage in the desert; smart ones probably already did. The economy would have been much better off (ie. for the workers and those surrounding them) if the the ranks had thinned out gradually over the past two decades, instead of this abrupt yet fully expected collapse.
Personally, I love 5dr hatches, but most consumers probably still consider them econoboxes, therefore not fitting the Buick or Pontiac marketting. Chevy is bracketting the segment with HHR and Malibu Maxx; more upscale customers can choose from Saab 9-2x and 9-3 Sport Combi . . . beyond that, there's the Caddy SRX, a big 5dr hatch based on CTS sedan. Personally, I love the plethra of choices in the 5dr segment in recent years from practically all the manufacturers; hopefully Americans are gradually changing their perception on the vehicle type.
Well how many are going to just quit and leave a $50 or 60K a yr. job
Isn't that a flat-out admission that their $50-60k a year income is unjustifiable in the real market place? If nobody else would take them for that high of an income. Hopefully they knew it was on borrowed time and saved while pulling that kind of income. I would.
BTW- your $850 a month is probably pocket change for a entreupeaneur like yourself.
$850/mo is actually more than all my personal expenses combined, including food, clothing and non-business transportation. Not even my housing expense is much higher than that. Like I said, the union has been living in cacoon for too long; $650/mo for comprehensive healthcare for a family of 4 is incredibly good deal . . . try buying medical and dental insurances on your own for once; a plan like theirs would cost me around $1500/mo if not more.
Comments
Isn't that redundent? If the majority of the population becomes the elite, the resulting group would not be elite, would it? The emphasis has to be on the "can" not "become."
It is important to realize that society exists to regulate/mollify envy . . . because fundamentally, when pushes come to shoves, everyone thinks that what is mine is mine, what is yours should be mine too; there is no gosh darn reason why you should enjoy any better life than I have, and I have every right to live a better life than you do . . . a set of intrinsicly unreconcillable demands. There are three ways to put a lid on the discontent:
(1) Really making it equal for everyone in material terms. Been there done that, numerous times. All failures for two basic reasons: (a) there is no objective utility value therefore someone is bound to feel cheated; (b) no incentive to work and produce anything if the result is guaranteed to be equal. Eventually the failures produce a Hobessian environment where the Leviathan (dictatorship) becomes highly desirable by a population living in poverty and leading "dark, brutish and gratefully short lives"
(2) Spiritual equality. A common faith that even if we are not all equal in our material lives, there is a spiritual plane upon which we are all equals. That worked for about a millinium and half, and now seems to be on the waning.
(3) Economic upward mobility; i.e. equal opportunity but no guarantee of equal results. Yes, most won't win the lottery, but someone will win it. In a free market, the chances are better than the lottery, because it is actually a positive-sum game, not a zero-sum game like in option (1). That's been the ethos of Anglo-American culture, and the fountainhead of its success vis. practically all other cultures/civilizations of the world.
Oh, yeah, definitely add Locke vs. Hobbs to the recommended reading list.
Your posts indicate that you don't understand the concepts of branding, resource allocation or LTV (B-school jargon for the lifetime value of a customer.) And I suspect that you don't treat workers with respect, despite the ill effects of bad morale on profitability.
Well, at least I know that my earlier prescribed business-plan exercise would have resulted in getting someone like you pink slipped. I get the sense that you would have written a 25-page treatise about the union, instead of analyzing the obvious problems with product, channel, diseconomies of scale and lack of customer focus that are really at the core of the company's problems.
I did not mention either Karl or Groucho by name; you did. Your bringing up Fountainhead and Atlas Shrugged (what exactly do they have to do auto industry or accounting) made bringing up Das Kapital a fair game. Please look in the mirror before throwing around ad hominim attacks. BTW, you brough up the two Ayn Rand volumes as if they were epithets, whereas I at least mentioned Karl's book in the context of scholarly work.
Your posts indicate that you don't understand the concepts of branding, resource allocation or LTV (B-school jargon for the lifetime value of a customer.) And I suspect that you don't treat workers with respect, despite the ill effects of bad morale on profitability.
You are wrong on both counts. Stop random guessing.
Well, at least I know that my earlier prescribed business-plan exercise would have resulted in getting someone like you pink slipped.
An organization like GM can't pay me enough to work there.
I get the sense that you would have written a 25-page treatise about the union, instead of analyzing the obvious problems with product, channel, diseconomies of scale and lack of customer focus that are really at the core of the company's problems.
All that would be beating around the bushes while ignoring the 800 pound gorilla in the middle of the living room. Just like your earlier prescriptions of building small cars on the stupendously expensive domestic labor without looking into any cost and scale potential in foreign acquisitions. Like I said, GM could have been managed much worse.
I think I'm the one who brought that up. Remember the $16 billion?
GM could have been managed much worse.
I'm not honestly sure how. I suppose they could have lost $17 billion instead. That would make the $16 billion seem like chump change in comparison.
At least GM management made $20+ billion on other M&A and spin-offs to offset that $16 billion loss on bad deals. You would just have focused on "core competence" carmaking, especially bashing your head trying to make small cars domesticly.
But they are selling cars. So your statement says people buying them don't like them; they just have no other choice? Ridiculous.
2014 Malibu 2LT, 2015 Cruze 2LT,
Where did I say this? As usual, you pursue this black-and-white thinking, with no regard for depth or nuance.
For example, if GM wanted FIAT's diesel technology, why not just set up a specific JV project or else license it? They could have done this for a fraction of the $4.4 billion that they flushed down the toilet with that dumb failed endeavor.
Rocky
More importantly, if protectionism had not taken hold in the late 1920's, it's doubtful Hitler (or Musso or Tojo) would have gained power to begin with. Hey, since you are such a history buff, here's an easy one, care to name the full name of the [non-permissible content removed] party that brought Hitler to power?
Hind sight is always 20/20. GM's interest in Fiat was far beyond diesel alone. What was envisioned including platform sharing for small cars from Fiat to GM, and medium platforms from GM to Fiat. Plus design input. Rembmer, you want GM to pay more attention to small cars and designs. Based on what was known at the time, Fiat deal looked great. It turned out that Fiat management was cooking its books, and due to international politics . . . GM management was very smart in buying an option to get out. $4 billion is relatively small loss considering both Ford and BMW have each lost far more acquiring much smaller companies.
Here's a thought, care to predict if BMW's current platform sharing on the Mini with Pougeot is a plus or minus? If you think you are smarter than the boys in charge.
Well, that explains a stock that has fallen almost 80% from its peak, and the junk bond debt rating. (I'd hate to see what things would be like if they were any less, er, "competent".)
So positive that there's still several billion dollars cash left
I'd suggest that you reread whatever book you used to learn how to read a financial statement. Perhaps you neglected to notice the liabilities side of the balance sheet?
Hind sight is always 20/20.
Except in this case, automotive industry observers knew the deals were bad before they ever got done.
The lessons of bad M&A are nothing new, much of the meltdown of the sixties stock market run-up was the byproduct of the overvalued conglomerates collapsing under their own weight after promises of "synergies" went unfulfilled.
In any case, why didn't Toyota make these same mistakes? I'd say that they had better managers who knew what they were doing, making products that customers want and that don't require deep discounting to sell at minimal margins. They should have spent more time reading Demming, and less time wasting their efforts on Ayn Rand.
We have the union to thank for that. GM is at least doing better than US Steel, Pan AM, Eastern or even United. After 120 years of unions in this country, there is not a single company thriving with heavy union influence. Co-incidence? Does anyone doubt that GM bond status would be much higher if union liability is taken off the books?
I'd suggest that you reread whatever book you used to learn how to read a financial statement. Perhaps you neglected to notice the liabilities side of the balance sheet?
Yet, none of the M&A and spin-offs created any liability that was already there due to the union.
Except in this case, automotive industry observers knew the deals were bad before they ever got done.
Some did, most did not. Disagreements are common in business; that's what makes it possible to trade; there wouldn't be trade if everyone is on the same side of the trade.
In any case, why didn't Toyota make these same mistakes?
You are kidding right? Japanese carmakers, like most other big Japanese business, are mired chest-deep in cross shareholdings, it's not even funny. I suppose you never heard of Toyota acquisition of Daihatsu? Fuji Heavy Industry (Subaru) was not exactly founded with 40% Toyota investment to begin with. Toyota is brushing up against 40% anti-trust limit on many companies, both in and out of the auto industry.
and less time wasting their efforts on Ayn Rand
Just as I suspected, you probably never read Rand, Marx, (Adam) Smith, Locke or Hobbs, or any of the other intellectual giants who gave thought to how the society works and how to put together a just one that benefits mankind. Your repeated jokes about Groucho revealed the full extent you knew about Marx. One is prone to repeat the mistakes of others if he does not even know it's been tried before.
I go back to my prior point -- people buy cars because they like them and trust them, not because it was built by a certain type of worker. If GM simply built cars people wanted, they would sell them. The average consumer could care less if was built by union labor, non-union labor, a robot or a chimpanzee.
The market share is falling because there are other products that customers prefer. Build a better car, and the sales should improve. Do you have any suggestions about how GM should design a car that people want?
You know you wanted to say the Party of the UAW.
w/ laughter ->
Rocky
P.S. am I right ?
One crucial failure can lead to many problems throughout a system. The union liability essentially creates a huge burden both in borrowing cost and company manageability. I'm sure that, as someone who went to B-school, you understand that borrowing cost alone can decide whether a company swims or sinks (if your borrowing cost is a couple points higher than your competitor, it doesn't even matter how much a genius you are, your company is as good as dead). . . and it's being played out right in front of our eyes for GMAC.
If GM simply built cars people wanted, they would sell them. The average consumer could care less if was built by union labor, non-union labor, a robot or a chimpanzee.
The second sentence is true for most consumers; Rocky may be an exception. The first setence needs to be qualified with "if they can sell at a price point that people want." That's where the labor cost problem comes in. GM can sell Cadillacs just fine. It becomes a problem when people only want to pay half or a third as much for a Chevy but it costs GM 75% of the cost of the Caddy to make the Chevy.
The market share is falling because there are other products that customers prefer.
At price points that consumers prefer.
Build a better car, and the sales should improve. Do you have any suggestions about how GM should design a car that people want?
GM is doing very well with Caddillacs; far better than crosstown rival Lincoln. In fact, the growth rate of Caddy sales rival those of BMW and Lexus, the top growing brands in that segment. Saab is also making remarkable progress in sales growth. Buick has to convince the market about its new luxury angle; we still have to wait and see, but the new offerings are much better than the old ones. Corvette should become Caddy (dream on! not if the dealers have a word in this and they do). The rest of the Chevy brand should become reseller and service network for cheap imports, as well as making money from rentals. Notice, I did not say a word about designing a specific car . . . because IMHO, the engineers know what is buildable on those ancient union production lines much much better than I do. It would be a waste of time and money to design a car that can not be built on an old production that can not be replaced under union contract.
BTW, with my new born, I discovered that infants love to be swaddled really really tight. They calm down and stay contented as soon as you, well, essentially tie them up with a blanket. I couldn't help wondering if there's something in our neuroreceptors that makes us all prone to trade freedom for security . . . as Ben Franklin said something about deserving neither ;-)
Carry on.
I'm not sure how you could ever use trade freedom and security in the same sentence ? :surprise:
I being a well trained individual in counter terrorism will tell you in my opinion you are very wrong !!!!
But you of course can believe what you want, until the chinese take us over. :P
Rocky :shades:
Do you guys feel that Ford and Chrysler are in the same trouble as GM ?
Rocky
Perhaps you are not familiar with Ben Franklin's original quote: "They who would give up an essential liberty for temporary security, deserve neither liberty or security"
I was only paraphrasing him when I said " . . . trade freedom for security . . ." The word "trade" was a verb in that sentence not a noun. Any way, the pertinence of Franklin's words needs no elaboration.
Rocky
Rocky
Oh hey, how are ya?
BTW- I agree competition is great for making cars better and will never disagree with that. However how are the Japanese and Domestic auto-manufactor's going to compete with the likes of India and China ???? They will either have to join the same labor pool or fold. This is why the UAW and alot of working folks don't feel secure. Whenever your competition outsources for cheaper labor, you have to follow unless you have superior products, something GM doesn't have yet.
Rocky
Repeat after me, fleet sales...
Not to mention that sometimes a person can't buy what they want.
IE - Joe Schmoe wants the new Honda Civic, but only has $12,000. Guess Joe'll have to settle for a Hyundai Accent (or a used car). Wait, look at the rebate on that Chevy Cobalt! Joe can buy a Cobalt with most of the goodies of the Civic... That's better than the Hyundai Accent!
It's not what the customer wants, but the customer will settle for it.
Which is a great recipe for an automaker to sacrifce future sales. For when that hypothetical Cobalt buyer eventually does have the money to buy a car they want, it ISN'T going to be a Chevy. For all Chevy means in their mind is 'Second Best'.
:shades:
Rocky
Chimpanzees are the best auto workers out there today... If we don't support our nation's chimpanzees, America will become a third-world country.
A nation where mothers will eat their babies for dinner. Fathers will gnaw off their own legs and then beat each other to death with them just to get a job. Not to mention the family dog will go into the stew pot!
Bird will mate in flight! Cats and dogs will live in harmony. It'll be the end of the world!!!
So, support the chimpanzee! It'll be the end of the world if you don't!
:P :P :P
I am my own flame warrior! Beware the wrath of Godzilla!
:shades:
>Repeat after me, fleet sales...
So all these new GM cars around where I live are owned by people who bought them as fleet cars?
Or all these new GM cars around where I live are owned by people who really wanted a Honda? LOLWROF
Get real. Just because you don't want one doesn't mean everyone doesn't want the cars.
2014 Malibu 2LT, 2015 Cruze 2LT,
I'm surprised we aren't talking about Delphi's recent move to void its labor contracts. Where will this lead? Will there be a strike? I still stand by my original prediction
And you really don't see any domestic cars on the road where I live. SUV and trucks... yes. But cars, not a chance.
But I do know that roughly 30% of all GM sales are to the fleets.
Honda and Toyota are already setting up factories in China, some already making cars ranging from Fit to Accord/Camry. IMHO, Japanese auto workers will probably have to make luxury cars, or quite making cars altogether. The "don't feel secure" part is nothing new. I'm sure the drivers of horse buggie cabs in NYC felt very insecure when the horseless carrige (cars) was introduced; not because the latter were either faster or more reliable . . . horses were much better at both than early cars, but because they were cheaper!
That's what progress means. Horse cab drivers had to find new jobs, as simple as that. Carmaking is a very messy and toxic business, just like horse droppings from horse cabs; shift carmaking overseas may well improve living standards in more ways than merely cheap cars. Government intervention to keep obsolete industries in place would only make labor unavailable to new industries that make better use of human and natural resources.
2014 Malibu 2LT, 2015 Cruze 2LT,
You're comparing apples to oranges. A few fleet sales don't tarnish a badge, but large volumes have obviously negative impacts, as has been covered many times.
Some data from the 2004 model year from Fleet-Central.com. The difference between the Big 2.5 and the larger transplants is significant, and it's easy to see why the "domestics" have felt more at ease at cutting corners with quality and customer satisfaction than have other companies that are more dependent on retail customers for their success:
Badge/ Percentage of registrations by fleets:
Buick / 34.5%
Cadillac / 18.9%
Chevrolet / 43.3%
Oldsmobile / 77.3%
Pontiac / 41.5%
Chrysler / 34.7%
Dodge / 46.1%
Ford / 42.1%
Lincoln / 29.9%
Mercury / 27.4%
Toyota / 9.5%
Lexus / 2.2%
Scion / 1.0%
Honda / 1.4%
Acura / 1.0%
Nissan / 12.5%
Obviously there are many people who buy GM cars because that's what they truly want.
Still, GM problem is not how many cars it sells but what it takes to sell them. I would say price is a higher priority to GM buyers than those from Honda and Toyota and of course those buyers of European vehicles.
I remember when Acura first started out and the ridicule Honda received from some in the industry for trying to sell a $20k plus Japanese car. How times have changed.
I just don't see the problem with cars being put into fleets. The rentals need to buy cars that are better equiped than the base, stripper models some seem to have. That makes a better impression. Our police department uses Chevies and they make a good impression on the criminals who get to ride in them.
As for the topic: I am expecting to see strikes by Delphi employees. I don't understand the posturing occuring in the talks right now; but I do understand some moves that have been made by Delphi. I expect to see death throe stikes by unions.
2014 Malibu 2LT, 2015 Cruze 2LT,
Yeah and why should they care if they are in the soup line ?
Delphi management wants them to go from $26-27 bucks an hour to $16 bucks an hour. That a $10-11 dollar an hour pay cut for the senior workers. They also haven't decided on healthcare benefits which have ranged has high as $650 dollars a month for a family of 4 in some possible proposals. The pension benefits would be frozen, and a 401K plan would be the only source for retirement. Kinda hard to ask a 50-60 yr. old to start saving up for his Golden Years when they are almost here. :confuse:
I also believe that Delphi doesn't really expect the massive wage and benefit cuts they have put forward.
Well it's went from $9.00 an hour, then to $12 bucks an hours, and now is at $16 bucks an hour. Wages aren't the only huge issue. Healthcare and getting a retirement is as important as wage issues. Non-union Toyota pays $21 bucks an hour in the cheap cost of living of the South.
It's a negotiating stance. They need to have a lot to "give up" if they expect the UAW to give up a lot. (job bank, completely funded health care, veto power over plant closings, unmanageable retiree benefits)
Well as you've seen Delphi is closing half of it's U.S. operations so they do have the power to close plants. My fathers plant which by the way is very profitable is even getting closed. :sick:
The unmanagable retirement benefits
This has happened for 2 reasons.
#1 Delphi/GM's lack of funding their obligations.
#2 Back during the golden years of GM's success they blew money down the drain, instead of funding the pension fund like the very successful one found at GE. (Which by the way has almost $30 Billion in it and is a money maker for GE)
I expect the final agreement to be a small reduction in current wages, with health care premium copays added, and elimination of job banks. I expect to see massive changes in the retirement plan, even possibly going as far as changing to a defined contribution plan for new workers instead of a traditional defined benefit pension.
This has already happened as was agreed on back in 1999'. My aunt is making $14 bucks an hour with a potential top wage of $18 per hour. She has a 401K plan only and pays a good portion of her health insurance.
(new hires) with a top wage of $15-16 per hour. She said it wouldn't be worth her gas to drive all the way to coopersville. I 100% agree with her. I guess it's all moot since she has only worked there a month, and she found out Friday she was going to lose her job within two years. She said she wished they would of told her that before she quit her last employer for Delphi.
"I personally think that's very wrong,especially since management probably knew this was going to happen for a while" :mad:
I suppose the way alot of 20+ yr. Delphi employees look at the current situation is why should I care about the survival of my company when they are pernamently closing the doors on me and my friends anyways ???? They are even closing the profitable divisions due to greed. The company is investing money in China and the U.S. operations won't exist anyways in 10-15 years, so why should I give a rats behind.
I suppose the EX-Delphi workers will have to settle for a greeters job at Walmart since they have lost there youth. No up and coming company is going to hire a 25 yr. veteran of Delphi because of all the wear and tear. These are not just doom and gloom idea's, but are common facts backed by statitics. Why hire a 55 yr. old, when 25 yr. old Johnny will give me longevity. I guess the alternative is the sharpened guillotine. Dad expects the worst- suicides by some. He saw tears in many peoples eyes once the bad news hit. The "Ice Man" Miller honestly doesn't care. Former Multi-Millionaire and CEO J.T. Battenburg who resigned over the cooking the books scandel got out alive. Alan Dawes-CFO- walked away with no lawsuit who was in charge of cooking the books.
My question is what are these colleges teaching the leaders of this great country. "The buisness of America is just buisness" and Politics works the same way ?
I guess I'm only a small fish in this country, but atleast I can sleep at night peacefully knowing my "maker" isn't going to punish me for treating good folks inhumanely. I would characterize myself as a very patriotic, morale, caring person, that has passion for the well being of his country and it's citzens.
Rocky
All those defined benefits plans are pie-in-the sky promises that can not possibly be fulfilled because there is no realistic actureal on how long people are going to live and what medical intervention will be available even 10 years from now. Frankly, even those for the government employees are questionable in the long run without massive tax increases. Everyone in the real world has been on 401k and other defined contribution plans for over a decade. The proverbial writings on the wall have been there for the domestic automaking for two decades. The empty promises in the union contracts are just that, empty promises. The workers would have started searching for new jobs over the past two decades without those union contracts holding their attention like mirage in the desert; smart ones probably already did. The economy would have been much better off (ie. for the workers and those surrounding them) if the the ranks had thinned out gradually over the past two decades, instead of this abrupt yet fully expected collapse.
I wouldn't. The benefits were to good. BTW- your $850 a month is probably pocket change for a entreupeaneur like yourself.
Rocky
Isn't that a flat-out admission that their $50-60k a year income is unjustifiable in the real market place? If nobody else would take them for that high of an income. Hopefully they knew it was on borrowed time and saved while pulling that kind of income. I would.
BTW- your $850 a month is probably pocket change for a entreupeaneur like yourself.
$850/mo is actually more than all my personal expenses combined, including food, clothing and non-business transportation. Not even my housing expense is much higher than that. Like I said, the union has been living in cacoon for too long; $650/mo for comprehensive healthcare for a family of 4 is incredibly good deal . . . try buying medical and dental insurances on your own for once; a plan like theirs would cost me around $1500/mo if not more.